Note4Students
From UPSC perspective, the following things are important :
Prelims level: NBFCs
Mains level: Paper 3- Banking regulation and allowing corporate houses to own banks
The article argues against the suggestion of allowing the corporate houses in the banking sector in India.
Context
- An Internal Working Group of the Reserve Bank of India (RBI) has recommended that corporate houses be given bank licences.
Background of the idea
- In February 2013, the RBI had issued guidelines that permitted corporate and industrial houses to apply for a banking licence.
- No corporate was ultimately given a bank licence.
- None of the applicants had met ‘fit and proper’ criteria.
- In 2014, the RBI restored the long-standing prohibition on the entry of corporate houses into banking.
- The RBI’s position on the subject has remained unchanged since 2014.
Advantages
- Corporate houses will bring capital and expertise to banking.
- Moreover, not many jurisdictions worldwide bar corporate houses from banking.
Risks involved
- As the report notes, the main concerns are interconnected lending, concentration of economic power and exposure of the safety net provided to banks
- Corporate houses can easily turn banks into a source of funds for their own businesses.
- In addition, they can ensure that funds are directed to their cronies.
- They can use banks to provide finance to customers and suppliers of their businesses.
- Adding a bank to a corporate house thus means an increase in concentration of economic power.
- Not least, banks owned by corporate houses will be exposed to the risks of the non-bank entities of the group.
- If the non-bank entities get into trouble, sentiment about the bank owned by the corporate house is bound to be impacted.
Suggestion by IWG and issues with them
- The Internal Working Group (IWG) believes that before corporate houses are allowed to enter banking, the RBI must be equipped with a legal framework to deal with interconnected lending and a mechanism to effectively supervise conglomerates that venture into banking.
- But there are following 4 issues with such suggestion-
- 1) Tracing interconnected lending will be a challenge.
- 2)The RBI can only react to interconnected lending ex-post, that is, after substantial exposure to the entities of the corporate house has happened.
- It is unlikely to be able to prevent such exposure.
- 3) Any action that the RBI may take in response could cause a flight of deposits from the bank concerned and precipitate its failure.
- 4) Pitting the regulator against powerful corporate houses could end up damaging the regulator.
Issues in allowing NBFC owning corporate house in banking
- Under the present policy, NBFCs with a successful track record of 10 years are allowed to convert themselves into banks.
- The Internal Working Group believes that NBFCs owned by corporate houses should be eligible for such conversion.
- This promises to be an easier route for the entry of corporate houses into banking.
- The Internal Working Group argues that corporate-owned NBFCs have been regulated for a while.
- However, there is a world of difference between a corporate house owning an NBFC and one owning a bank.
- Bank ownership provides access to a public safety net whereas NBFC ownership does not.
- The reach and clout that bank ownership provides are vastly superior to that of an NBFC.
- The objections that apply to a corporate house with no presence in bank-like activities are equally applicable to corporate houses that own NBFCs.
Consider the question “What are the concerns and challenges in allowing the corporate houses in the banking sector in India?”
Conclusion
India’s banking sector needs reform but corporate houses owning banks hardly qualifies as one. If the record of over-leveraging in the corporate world in recent years is anything to go by, the entry of corporate houses into banking is the road to perdition.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 32
Mains level: Paper 2- Recourse to Article 32 and related issues
The article deals with the issue of recourse to Article 32 for violation of Fundamental Rights. But it is subject to fundamental principles of administration of justice.
Context
- The Chief Justice of India is reported to have stated during the hearing of journalist Siddique Kappan’s bail matter, that the Court was trying to “discourage” recourse to Article 32.
Recourse under Article 32 is not absolute
- The apex judicial process shows clearly that the Court regards Article 32 as a judicial power subject to the fundamental principles of administration of justice.
- The Supreme Court has already extended rules and doctrines such as laches (delays) or res judicata (a matter already decided by a competent court) or any other principle of administration of justice.
- Article 32 keep open “the doors of this court” and requires the state not to “put any hindrance” to a person seeking to approach the Court.
- However, the Court must ignore all laws of procedure, evidence, limitation, res judicata and other provision.
- The Supreme Court has also said that faith “must be inspired in the hierarchy of Courts [ Recourse under Article 226 should be sought before approaching the SC] and the institution as a whole” and not” only in this Court alone”.
- So, even if there is a constitutional right to remedies it remains subject to the discipline of judicial power and process.
New facets of Article 32
- The Supreme Court has also discovered new facets of Article 32.
- As early as 1950, it has ruled that powers under Article 32 are not limited to the exercise of prerogative writs.
- In 1987 the Court ruled that it has powers to rule for compensation of violation of fundamental rights.
- In 1999 it said that this power extended to the rectification of its own mistakes or errors.
Comparing Article 226 and Article 32
- Article 226 is the very dimension; the high court’s vast jurisdiction technically casts no duty on them to enforce fundamental rights.
- They have the discretion to act or not to; in contrast, the Supreme Court must.
- Fourth, Article 32 is not absolute, the Supreme Court decides on what “appropriate proceedings” should be for it to be so moved.
- But the Court may not prescribe any process as it likes but only that process which preserves, protects and promotes the right to constitutional remedies.
Need for effective bail system
- The just demand for an expeditious and effective bail system stems from manifest discrimination in bail .
- In several instances, one case is fast-tracked whereas others are consigned to slow-moving judicial action, even when rights to life and health are endangered.
- Scandalous judicial delays, measures of decongestion and diversion, and a bold resolution of “who watches the watchman” syndrome now demand urgent apex response.
Consider the question “Seeking remedy from the Supreme Court for the violation of fundamental rights under Article 32 is also a fundamental right. However, enforcement of it is not absolute. In light of this, examine the challenges in its enforcement by the Supreme Court.”
Conclusion
Article 32 makes the apex court into a “people’s court”. And future historians should not be able to conclude that the Court deliberately dealt deathblows to this “soul” of the Constitution, as Babasaheb Ambedkar described Article 32.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Challenges in securing RCEP
Asian centrality
- China’s response is a ‘dual circulation’ strategy for self-reliance and military-technological prowess to surpass the U.S.
- The global governance role of the U.S. is already reduced.
- The U.S. now exercises power with others, not over them.
- Despite its military ‘pivot’ to Asia, the U.S. needs India in the Quad, to counterbalance the spread of China’s influence through land-based trade links.
- India, like others in the Quad, has not targeted China and also has deeper security ties with Russia.
- With the ASEAN ‘code of conduct’ in the South China Sea, both the security and prosperity pillars of the U.S.-led Indo-Pacific construct will be adversely impacted.
- Leveraging proven digital prowess to complement the infrastructure of China’s Belt and Road Initiative will win friends as countries value multi-polarity.
Atmanirbhar Bharat and Challenges
- ‘Atmanirbhar Bharat’ will leverage endogenous technological strength, data and population.
- With the Rafale aircraft purchase, India has recognised that there will be no technology transfer for capital equipment.
- Military Theatre Commands should be tasked with border defence giving the offensive role to cyber, missile and special forces based on endogenous capacity, effectively linking economic and military strength.
- The overriding priority should be infrastructure including electricity and fibre optic connectivity; self-reliance in semiconductors, electric batteries and solar panels; and skill development.
Conclusion
There are compelling geopolitical and economic reasons for shaping the building blocks of the Asia-led order, which is not yet China-led, to secure an ‘Atmanirbhar Bharat’, and place in the emerging triumvirate.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Gulf countries
Mains level: Paper 2- New possibilities in cooperation with the Gulf countries
The Gulf region offers new possibilities of cooperation to India. The article explains these possibilities.
Context
- External Affairs Minister S Jaishankar’s visit to Bahrain and the United Arab Emirates recently is a good moment to reflect on the structural changes taking place in the Gulf and the region’s growing influence in the Indian Ocean.
Issues in approach towards the region
- For decades, India’s mercantilism saw the Gulf as a source of oil and a destination for labour exports.
- India’s bureaucratic approach to the Gulf was incapable of a political engagement with the region’s interests.
- The Indian elite has long viewed the Gulf as a collection of extractive petro-states run by conservative feudatories.
- Although the Gulf kingdoms were eager to build strong and independent political ties with India without a reference to Islamabad, India viewed them through the prism of Pakistan.
Influence in the Indian Ocean
- Delhi’s traditional focus in the Indian Ocean was riveted on Mauritius and the large Indian diaspora there.
- P.M.s visit to Mauritius and Seychelles in March 2015 saw the articulation of a long-overdue Indian Ocean policy and an acknowledgement of the strategic significance of the island states.
- Since then, India has brought Madagascar and Comoros along with Mauritius and Seychelles into the Indian Ocean Division.
- India also unveiled a maritime strategic partnership with France, a resident and influential power in the Western Indian Ocean.
- Earlier this year, Delhi became an observer at the Indian Ocean Commission — the regional grouping that brings France’s island territory of Reunion together with Comoros, Madagascar, Mauritius, and Seychelles.
- India has also become an observer to the Djibouti Code of Conduct — a regional framework for cooperation against piracy between the states of the Gulf, the Horn of Africa and East Africa.
5 Areas of new possibilities with the Gulf
1) Protecting India’s interests
- First is the immediate need to shield India’s interests in the post-pandemic turbulence that is enveloping the region.
- As the Gulf considers cutting back on foreign labour, Delhi would want to make sure its workers in the region are insulated.
- Delhi is also eager to improve the working conditions of its large labour force — close to eight million — in the Gulf.
2) New and long-term economic cooperation
- As the Gulf looks at a future beyond oil, they have embarked on massive economic diversification and are investing in a variety of new projects including renewable energy, higher education.
- India must get its businesses to focus on the range of new opportunities in the Gulf.
- India also needs to tap into the full possibilities of Gulf capital for its own economic development.
3) Financial power translating into political influence
- The Gulf’s financial power is increasingly translating into political influence shaping political narrative in the Middle East.
- The influence has been manifest in their successful transformation of the debate on Arab relations with Israel.
4) Influence on regional conflicts
- The Gulf’s ability to influence regional conflicts from Afghanistan to Lebanon and from Libya to Somalia has increased.
- The Gulf today delivers economic and security assistance to friendly states.
- The UAE currently chairs the Indian Ocean Rim Association (IORA) and has been eager to work with India in developing joint infrastructure projects.
- India needs to bring scale and depth to its regional initiatives on connectivity and security in the Indian Ocean.
5) Reforms taking place in the region
- The Gulf seek to reduce the heavy hand of religion on social life, expand the rights of women, widen religious freedoms, promote tolerance, and develop a national identity that is not tied exclusively to religion.
- The UAE has been the leader in this regard.
Consider the question “India’s engagement with the Gulf countries has been limited in several aspects. However, the region offers new possibilities of strategic and cooperation to India. Evaluate these possibilities.”
Conclusion
As India seeks to recalibrate it’s ties with the Gulf, the real challenge for South Block is to get the rest of the Indian establishment to discard outdated perceptions of the Gulf and seize the new strategic possibilities with the region.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Construction of dams Brahmaputra river by China
Scarcity of water in India and China
- As India and China continue to grow demographically as well as economically amid increased consumption among its citizenry, both nations face water constraints.
- China, which is home to close to 20 per cent of the world’s population, has only 7 per cent of its water resources.
- Severe pollution of its surface and groundwater caused by rapid industrialisation is a source of concern for Chinese planners.
- China’s southern regions are water-rich in comparison to the water-stressed northern part.
- The southern region is a major food producer and has significant industrial capacity as a consequence of more people living there.
- India is severely water-stressed as well.
- Similar to China, India has 17 per cent of the world’s population and 4 per cent of water.
- As in China, an equally ambitious north-south river-linking project has been proposed in India.
Impact on downstream states
- The construction of several dams along the Yarlung (Brahmaputra) river on the Chinese side has been a repeated cause for concern for Indian officials and the local people.
- China has an ambitious plan to link its south and north through canals, aqueducts and linking of major rivers to ensure water security.
- In pursuit of these goals, China, being an upper riparian state in Asia, has been blocking rivers like the Mekong and its tributaries, affecting Southeast Asian countries like Thailand, Vietnam, Laos and Cambodia.
- It has caused immense damage to the environment and altered river flows in the region.
- China sees these projects as a continuation of their historic tributary system as the smaller states have no means of effectively resisting or even significant leverage in negotiations.
Challenges for India
- There are now multiple operational dams in the Yarlung Tsangpo basin with more dams commissioned and under construction. These constructions present a unique challenge for Indian planners.
- 1) Dams will eventually lead to degradation of the entire basin:
- Silt carried by the river would get blocked by dams leading to a fall in the quality of soil and eventual reduction in agricultural productivity.
- 2) The Brahmaputra basin is one of the world’s most ecologically sensitive zones.
- It is identified as one of the world’s 34 biological hotspots.
- This region sees several species of flora and fauna that are endemic to only this part of the world.
- The river itself is home to the Gangetic river dolphin, which is listed as critically endangered.
- 3) The location of the dams in the Himalayas pose a risk.
- Seismologists consider the Himalayas as most vulnerable to earthquakes and seismic activity.
- The sheer size of the infrastructure projects undertaken by China, and increasingly by India, poses a significant threat to the populations living downstream.
- Close to a million people live in the Brahmaputra basin in India and tens of millions further downstream in Bangladesh.
- 4) Damming Brahmaputra would result in water security in an era of unprecedented shifting climate patterns.
- This security extends beyond water, as there is the potential to significantly change the flow rate during times of standoffs and high tensions.
Way forward
- Both sides must cease new constructions on the river and commit to potentially less destructive solutions.
- Building a decentralised network of check dams, rain-capturing lakes and using traditional means of water capture have shown effective results in restoring the ecological balance while supporting the populations of the regions in a sustainable manner.
Conclusion
There are alternate solutions to solving the water crisis. It is in the interest of all stakeholders to neutralise this ticking water bomb.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Ground level pollution and its impact on agriculture
Mains level: Paper 3- Interplay between agri-subsidies and pollution
Agriculture’s contribution to air pollution
- Agriculture’s contribution to air pollution runs deeper than what happens between crop seasons.
- The Indo-Gangetic plain is also one of the world’s largest and rapidly-growing ammonia hotspots.
- Atmospheric ammonia, which comes from fertiliser use, animal husbandry, and other agricultural practices, combines with emissions from power plants, transportation and other fossil-fuel burning to form fine particles.
Impact of pollution on agriculture
- It is important to note that agriculture is a victim of pollution as well as its perpetrator.
- Particulate matter and ground-level ozone formed from industrial, power plant, and transportation emissions among other ingredients cause double-digit losses in crop yields.
- Ozone damages plant cells, handicapping photosynthesis, while particulate matter dims the sunlight that reaches crops.
- Agriculture scientist Tony Fischer’s 2019 estimates of the two pollutants’ combined effect suggest that as much as 30 per cent of India’s wheat yield is missing (Sage Journals, Outlook on Agriculture).
- Earlier, B Sinha et al (2015), in Atmospheric Chemistry and Physics Discussions, found that high ozone levels in parts of Haryana and Punjab could diminish rice yields by a quarter and cotton by half.
Role played by subsidies
- The current system of subsidies is a big reason that there is stubble on these fields in the first place.
- Free power — and consequently, “free” water, pumped from the ground — is a big part of what makes growing rice in these areas attractive.
- Open-ended procurement of paddy, despite the bulging stocks of grains with the Food Corporation of India, adds to the incentives.
- Subsidies account for almost 15 per cent of the value of rice being produced in Punjab-Haryana belt.
- Fertiliser, particularly urea in granular form, is highly subsidised.
- It is one of the cheapest forms of nitrogen-based fertiliser, easy to store and easy to transport, but it is also one of the first to “volatilise,” or release ammonia into the air.
- This loss of nitrogen then leads to a cycle of more and more fertiliser being applied to get the intended benefits for crops.
Way forward
- We need to shift the nature of support to farmers from input subsidies to investment subsidies.
- This could involve the conversion of paddy areas in this belt to orchards with drip irrigation, vegetables, corn, cotton, pulses and oilseeds.
- All of the above consume much less water, much less power and fertilisers and don’t create stubble to burn.
- A diversification package of, say, Rs 10,000 crore spread over the next five years, equally contributed by the Centre and states, may be the best way to move forward in reducing agriculture-related pollution.
- The approach to diversification has to be demand-led, with a holistic framework of the value chain, from farm to fork and not just focused on production.
- On the fertiliser front, it would be better to give farmers input subsidy in cash on per hectare basis, and free up the prices of fertilisers completely.
Conclusion
Taken together, these measures could double farmers’ incomes, promote efficiency in resource use, and reduce pollution — a win-win solution for all.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Key trends in India's economic history
Mains level: Paper 3- Analysing India's economic progress
The article analyses India’s economic trajectory after independence and divides it into five phases. India’s progress is also compared with Pakistan’s as both countries have had much in common.
What drives economic growth
- Examining the experiences of different countries to analysing the growth may seem a promising approach.
- However, generalising from specific experiences can be misleading since ground conditions vary hugely across countries.
- There are two ways to avoid the pitfalls of generalising from specific cases.
- 1) The first is to examine the same country over time to look for changes in outcomes at specific points in time.
- 2) A second approach is to compare countries with shared history, culture and geography.
- If there are stark differences in outcomes between them, then there may be some policy lessons to be drawn.
The Indian subcontinent provides lessons from both approaches. The 73 years of post-Independence India has generated a lot of evidence across different political-economic regimes. This period has also provided us with the contrasting experiences of India and Pakistan, two countries that share history, geography and socio-cultural mores.
5 phases of India’s economic progress in 73 years: first approach
- 1) The first phase was the period 1950-65. This was the Nehruvian period of state-led industrialisation.
- Starting in 1950 annual per person GDP growth averaged 2 per cent during this period.
- This translated to aggregate annual GDP growth of around 4 per cent since the population was growing at close to 2 per cent.
- 2) The second phase of post-Independence India was during 1965-84.
- This period was an unmitigated economic disaster with negative per capita growth.
- The phase was marked with increasing state control of the economy, nationalisation of industry, closing of the economy to trade and a systematic weakening of institutions.
- 3) The third phase is 1984-91 when the government ushered in the first round of economic reforms by liberalising capital goods imports as well as starting industrial de-licensing.
- These reforms were rewarded by a growth take-off. India’s annual per capita GDP growth averaged 3.1 per cent while aggregate GDP grew at 5.2 per cent during 1984-91.
- 4) The period 1991-2004 is typically classified as the liberalisation phase.
- The reform effort was reflected in the 4.9 per cent annual per capita GDP growth during 1991-2004.
- 5) India embarked on a distinctive phase of faster growth post-2004 on the back of large investments in infrastructure.
- Per person GDP growth in the period 2004-2015 averaged 7.7 per cent.
- The corresponding aggregate GDP growth averaged 9 per cent.
- This came at a cost, as a number of these infrastructure projects later caused problems in the banking sector on account of burgeoning NPAs, a problem that continues till today.
Comparison with Pakistan
- In 1950, Pakistan’s per person GDP was almost 50 per cent greater than India that year.
- Due to political uncertainty, Pakistan stagnated throughout the 1950s while a politically stable India grew.
- As a result, by 1960, India had almost caught up with Pakistan in per capita GDP terms.
- Unfortunately, from 1964, India went into two decades of economic stagnation while Pakistan opened up to foreign capital.
- By 1984, Pakistan’s per capita income was more than double that of India’s.
- Pakistan’s slowdown began in the 1980s.
- This period coincided with the reforms in India.
- Nevertheless, it wasn’t till as recently as 2010 that India’s per capita GDP finally overtook Pakistan.
4 takeaways
- First, openness to trade and private enterprise usually has positive effects on growth.
- Second, rapacious and exploitative democratic systems do not necessarily promote growth. Pakistan in the 1950s, 1990 and post-2010 is a good example.
- Third, the socio-economic environment surrounding religious fundamentalism may be inimical to growth.
- Fourth, degradation of institutions that regulate, arbitrate and enforce laws can be costly.
Conclusion
India’s growth when analysed from both the perspective offers valuable lessons for India and these lessons must guide India’s future economic trajectory.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: RCEP countries
Mains level: Paper 3- RCEP and India's concerns about it
The article examines the significance of the RCEP and India’s concerns over its provision.
Significance of RCEP
- Last week, 15 East Asian countries signed the Regional Comprehensive Economic Partnership (RCEP), the largest free trade agreement (FTA) ever.
- In 2019, RCEP members accounted for about 30% of world output.
- More importantly, about 44% of their total trade was intra-RCEP, which is a major incentive for the members of this agreement.
- The deal could contribute to the strengthening of the regional value chains.
Comparing RCEP with Trans-Pacific Partnership (TPP)
- The TPP included several regulatory issues including labour and environmental standards and “anti-corruption”.
- All of these issues could raise regulatory barriers and severely impede trade flows.
- In contrast, RCEP includes traditional market access issues, following the template provided by the World Trade Organization (WTO).
- RCEP also includes issues like electronic commerce, investment facilitation that are currently being discussed by WTO members to “reform the multilateral trading system”.
Would RCEP be able to realise trade and investment liberalisation?
- In case of trade in goods, RCEP members have taken big strides towards lowering their tariffs.
- However, commitments made by RCEP members for services trade liberalisation do look shallow in terms of the coverage of the sectors.
- Movement of natural persons, an area in which India had had considerable interest, is considerably restricted.
- The areas of investment and electronic commerce, in both of which India had expressed its reservations on the template adopted during RCEP negotiations, the outcomes are varied.
- The text on investment rules shows that it is a work-in-progress.
- The rules on dispute settlement procedures are yet to be written in.
Will India’s concerns get addressed in near future?
- The answer seems to be unambiguously in the negative on two counts.
- 1) Two of the concerns India had raised, namely, the deep cuts in tariffs on imports from China, and provisions relating to the investment chapter, have become even more significant over the past several months.
- 2) India’s Atmanirbhar Bharat Abhiyan is primarily focused on strengthening domestic value chains, while RCEP, like any other FTA is solely focused on promoting regional value chains.
Consider the question “What were India’s concerns about RCEP that resulted in India not signing it? ”
Conclusion
This suggests that the prospects of India joining the RCEP in the near future appears bleak.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Challenges to democracy
Democracies across the world are facing several challenges. The article examines these challenges.
Threats to democracy
- Efforts by Donald Trump, to negate the result of the recently held presidential elections, indicates a new set of tactics, previously seen only in dictatorships.
- In the case of the U.S., one of the world’s oldest democracies, what we are witnessing is a deep divide.
- This division is evident in many other democratic nations today.
- This is true of many other democracies as well and must be viewed as a wake-up call.
- What is evident is that issues of identity, or threats to identity, are becoming an important issue in elections across democracies.
- Democracies already confront such problems, but it will become still more evident as time passes.
- Manipulation of grievances by using psychometric techniques (as done by Cambridge Analytica), and the use of ‘deep fakes’ made possible through Artificial Intelligence, further enhances the threat to current notions of democracy.
Troubles to democracy in Europe
- Europe will have to deal with the declining importance of America in global politics.
- An uncertain Brexit will further damage the prospects of both the United Kingdom and Europe.
- Russia, under Vladimir Putin, remains an enigma, for despite its military strength and strategic congruence with China, its future appears increasingly uncertain.
- France displays even greater fragility and French values appear to be undergoing major changes.
- The recent wave of terrorist attacks has been a major trigger, raising questions about long-held secular beliefs.
Return of terrorism
- Terrorism is resurfacing, and with renewed vigour.
- The al-Qaeda is again becoming prominent. The IS, which many thought had been vanquished has returned in full force.
- Recently IS has carried out spectacular attacks in France and in Austria which is a reminder of the transnational character of the threat it poses to democratic countries.
- They combine symbolism with spectacular violence.
- The intent is to shock the public at large, and produce a reaction across the entire Muslim world, reigniting the fading embers of a religio-cultural conflict.
Information manipulation
- Alongside the above issues, there is a growing concern across the globe about increasing efforts to manipulate information in order to perpetuate power.
- Manipulation of information — and also events — to achieve certain desired ends, is becoming the stock-in-trade of many a democratic regime as well.
- Many democratic nations today resort to manipulating data to support or prop up the government’s version of events. Informational autocracy is, hence, the latest danger that threatens democracies.
India’s challenges
1) Threat to democracy
- In some regions, especially where mid-term elections are scheduled, as in West Bengal, the atmosphere today is highly polarised.
- The ghosts of the Citizenship (Amendment) Act and the National Register of Citizens have by no means been laid to rest.
- Jammu and Kashmir (J&K) is witnessing a kind of surface calm, but beneath this, there are evident tensions.
- Aggravating this situation are Pakistan’s efforts to push in terrorists in ever larger numbers.
Uncertain external environment
- The downward spiral in its relations with China has not been arrested.
- 15 Asia-Pacific nations, including China, have signed on to the world’s biggest trade bloc, the Regional Comprehensive Economic Partnership (RCEP) — from which India has been excluded.
- The RCEP, which covers almost a third of the world’s economy, is perceived as the springboard for future economic recovery across the region.
- India’s absence from RCEP represents a cardinal failure of India’s bargaining strategy.
- India’s isolation is evident from the fact that even a weak Pakistan is pursuing a policy of provocation— the latest provocation being the holding of Assembly elections in Gilgit-Baltistan.
- India is again being steadily marginalised in Afghanistan, where the control of the Taliban is increasing, with all other players accomodating Taliban.
Consider the question “What are the various challenges faced by the democracies across the world and India is no exception to it. In the context of this, examine the issues facing democracy in India.”
Conclusion
Though democracies across the world are facing several issues, resilience inherent in them will help them clear the chaos created by these issues.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: RCEP
Mains level: Paper 3- Economic liberalisation and its impact on Indian economy
The article counters the argument made by External Affairs Minister S. Jaishankar about the impact of economic liberalisation on India’s economy.
Impact of liberalism on India
- India’s External Affairs Minister S. Jaishankar recently disapproved of free trade and globalisation.
- About FTA’s he said that “the effect of past trade agreements has been to de-industrialise some sectors.”
- These observations were made days after countries of the Asia-Pacific region signed the Regional Comprehensive Economic Partnership (RCEP) agreement.
- He said that , “in the name of openness, we have allowed subsidi[s]ed products and unfair production advantages from abroad to prevail”
Flaws in the argument
- There are several flaws in Mr. Jaishankar’s arguments.
1) India cannot be the part of global value chain
- India is now truly at the margins of the regional and global economy.
- With trade multilateralism at the World Trade Organisation (WTO) remaining sluggish, FTAs are the gateways for international trade.
- By not being part of any major FTA, India cannot be part of the global value chains.
- India’s competitors such as the East Asian nations, by virtue of they being part of mega-FTAs, are in an advantageous position to be part of global value chains and attract foreign investment.
2) Indian economy has bee relatively closed economy
- India is surely a much more open economy than it was three decades ago, globally, India continues to remain relatively closed when compared to other major economies.
- According to the WTO, India’s applied most favoured nation import tariffs are 13.8%, which is the highest for any major economy.
- Likewise, according to the United Nations Conference on Trade and Development, on the import restrictiveness index, India figures in the ‘very restrictive’ category.
- From 1995-2019, India has initiated anti-dumping measures 972 times (the highest in the world) trying to protect domestic industry.
3) Economic survey accepts the benefits of FTAs
- The External Affairs Minister is contradicting government’s economic survey presented earlier this year.
- The survey concluded that India has benefitted overall from FTAs signed so far.
- Blaming FTAs for deindustrialisation means ignoring real problem of the Indian industry — which is the lack of competitiveness and absence of structural reforms.
4) India has been a major beneficiary of economic globalisation
- It cannot be ignored that India has been one of the major beneficiaries of economic globalisation — a fact attested by the International Monetary Fund (IMF).
- Post-1991, the Indian economy grew at a faster pace, ushering in an era of economic prosperity.
- According to the economist Arvind Panagariya, poverty in rural and urban India, which stood at close to 40% in 2004-05, almost halved to about 20% by 2011-12.
- This was due to India clocking an average economic growth rate of almost 8%.
Conclusion
Desire to make India a global destination for foreign investment is a pipe dream because it is naive to expect foreign investors to be gung-ho about investing in India if trade protectionism is the government’s official policy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Importance of export for growth
The article highlights the argument made by Arvind Panagaria about the primacy of export for the progress of the country in his new book India Unlimited: Reclaiming the Lost Glory.
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From UPSC perspective, the following things are important :
Prelims level: Entry 56 of the Union List
Mains level: Paper 2- Challenges to water governance
The article highlights the issue of challenges facing the water governance in India, how need for more coordination between the Centre and the States.
Objectives of the two bills
- Interstate River Water Disputes Amendment Bill 2019 and the Dam Safety Bill 2019 were passed by Lok Sabha and awaits Rajya Sabha nod.
- The Interstate River Water Disputes Amendment Bill 2019 seeks to improve the inter-state water disputes resolution by setting up a permanent tribunal.
- The Dam Safety Bill 2019 aims to deal with the risks of India’s ageing dams, with the help of a comprehensive federal institutional framework comprising.
- The other pending bills also propose corresponding institutional structures and processes.
Challenges to the federal water governance
- The agenda of future federal water governance is not limited to the above cited issues.
- These include emerging concerns of long-term national water security and sustainability, the risks of climate change, and the growing environmental challenges, including river pollution.
- These challenges need systematic federal response where the Centre and the states need to work in a partnership mode.
- Greater Centre-states coordination is also crucial for pursuing the current national projects — whether Ganga river rejuvenation or inland navigation or inter-basin transfers.
Challenges to water governance
- Water governance is perceived and practiced as the states’ exclusive domain, even though their powers are subject to those of the Union under the Entry 56 about inter-state river water governance.
- The River Boards Act 1956 legislated under the Entry 56 has been in disuse.
- No river board was ever created under the law.
- The Centre’s role is largely limited to resolving inter-state river water disputes by setting up tribunals for their adjudication.
- Combined with the states’ dominant executive power, these conditions create challenges for federal water governance.
- This state of affairs puts the proposed bills at a disadvantage.
Bridging the water governance gap
- Each bill proposes their own institutional mechanisms and processes leaning on closer Centre-state coordination and deliberation.
- The disputes resolution committee and dam safety authority rely on active Centre-states participation.
- Segmented and fragmented mechanisms bear the risks of the federal water governance gap.
Way forward
- The massive central assistance (Rs 3.6 lakh crore- Centre and states together) through Jal Jeevan Mission (JJM), is an opportunity to open a dialogue with the states to address this governance gap.
- Globally, federated systems with comparable organisation of powers have used similar investments to usher key water sector reforms.
- The symbiotic phase of implementing JJM can be productively used to engage in a dialogue with the states about the larger water resources management agenda, beyond the mission’s goals.
- The Centre can work with the states in building a credible institutional architecture for gathering data and producing knowledge about water resources.
Consider the question “Water governance in the country requires greater Centre-State coordination to deal with the current issues as well as future challenges. In light of this, examine the challenges and suggest the strategies to deal with it.”
Conclusion
Bridging the governance gap between the Centre and State and creation of institutional framework is at the heart of addressing the future challenges to the federal water governance in the country.
Back2Basics: River Board Act 1956
- The act to provide for the establishment of River Boards for the regulation and development of inter-state rivers and river valleys.
- It empowers the Central Government, on a request received in this behalf from a State Government to establish a River Board for advising the Governments on regulation or development of an inter-State river or river valley or any specified part thereof.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Paris Agreement
Mains level: Paper 3- Balancing development with climate action
India faces an uphill task of balancing its climate action with the economic growth. Bridging the energy deficit through renewable energy in cost-effective and increasing urban forestry could help in balancing the both.
Comparing India’s commitment
- China’s announcement recently to achieve carbon neutrality, that is, effectively generating net-zero emissions, before 2060 has now shifted focus on India’s commitments.
- In this context, let us compare India’s commitments with other countries, based on an independent scientific analysis carried out by the Climate Action Tracker. Major findings of it are:-
- 1) India is one of the only six countries (amongst the 33 that were assessed), and the only G-20 country, whose climate commitments at Paris are on a path compatible to limit warming well below 2°C.
- 2) It seems that India is well on its way to achieving its carbon intensity reduction and non-fossil-fuel electricity growth capacity commitments well before the 2030 target year.
- Even though China’s commitment is likely to lower warming projections by around 0.2 to 0.3 degrees C by 2100, China continues to remain in the “highly insufficient” category.
- India, despite being the fourth-largest emitter, has consistently kept its commitments in sync with its fair share and will achieve, if not over-achieve, these targets.
Difference in development and growth levels
- Development and growth in India are still at an early stage, and our first goal remains increasing the availability of adequate infrastructure for all Indians.
- A measure of this deficit is that we use only about 0.6 tonnes of oil-equivalent worth of energy per person per year while in China it is 2.36 tonnes per person per year, and is at least 4 tonnes per person per year in the OECD countries.
- It is, therefore, essential that we rapidly bridge the energy deficit.
Bridging the energy deficit through renewable and cost-effective manner
- Cost-effectiveness in renewable electricity has occurred rather rapidly, largely as a result of the global reduction in solar PV and battery prices.
- Solar electricity is already the cheapest electricity available in India when the sun is shining.
- It now seems that round-the-clock renewable electricity may be cost-competitive with coal electricity in the near future.
- This cost-effectiveness of zero-carbon options will emerge in other applications as well.
- It will involve dedicated action in some of the vital sectors which can generate and sustain employment while adding to the country’s economic growth.
- It will enable a shift away from emissions-intensive fossil fuels, reducing our dependence on fuel imports.
Urban forestry to compensate for environmental degradation
- Increasing urban forestry could help compensate for environmental degradation as a result of rapid urbanisation in several Indian cities.
- This is vital to restore the flow of crucial ecosystem services, including air quality, and increase the resilience of cities to extreme climatic events.
- As a result, enhancing biodiversity, minimising human-wildlife conflict and restoring India’s pristine forests by developing dedicated wildlife/biodiversity corridors is an essential next step.
Way ahead
- At the developmental crossroads that India stands, the next decade is vital for its own economic growth, its climate action, and its social and ecological well-being.
- With this in mind, India must focus on its domestic developmental prerogative and disengage them from the pressures that come along with international negotiations, focussing on actions that reduce the development deficits, which also provide strong climate benefits.
- India must initiate a narrative, discussion and dialogue which focuses on each country taking on commitments that move their carbon trajectory towards the Paris agreement goal of limiting global warming to well below 2°C.
Consider the question “Development and growth in India still at an early stage which makes the challenge of balancing the commitment to climate action with economic developement more difficult. In light of this, suggest the strategy that India should follow.”
Conclusion
India, being at the crossroads of development needs to balance the development goals with its commitment towards climate action.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Relocation of supply chains and challenges India faces
The article deals with the challenges India faces in attracting the relocating supply chains in the wake of the pandemic.
Is China losing its appeal
- Some labour-intensive industries, such as textiles and apparels, have been moving to Bangladesh and Sri Lanka as labour costs in China are increasing.
- But trends in other industries show that businesses have mostly remained in China.
- COVID-19 crisis has resulted in firms establishing relatively small-scale operations elsewhere.
- This is perceived as a buffer against being completely dependent on China, referred to as the ‘China +1’ strategy.
3 Reason for firms to remain in China
- 1) Starting an enterprise and maintaining operations in China are much easier than elsewhere.
- 2) Chinese firms are nimble and fast, which is evident from the quick recovery of Chinese manufacturing after the lockdown.
- 3) Many global companies have spent decades building supply chains in China, getting out would mean moving the entire ecosystem.
3 Challenges facing India
- This has led to intensification of competition among Asian countries to be ‘plus one’ in the emerging manufacturing landscape.
- India faces three challenges in this race.
1) Increasing domestic public investment
- First is the task of increasing domestic public investments, which have implications for both demand and supply sides.
- In India, even before the pandemic, the growth in domestic investments had been weak,
- This seems to be the opportune time to bolster public investments as interest rates are low globally and savings are available.
- Private investments would continue to be depressed, due to the uncertainty on the future economic outlook.
2) Reforms in trade policy
- India needs a major overhaul in her trade policy world trade had been rattled by tendencies of rising economic nationalism and unilateralism leading to the return of protectionist policies.
- A revamped trade policy needs to take into account the possibility of two effects of the RCEP:
- 1) Walmart effect: It would sustain demand for basic products and help in keeping employee productivity at an optimum level, but may also reduce wages and competition due to sourcing from multiple vendors at competitive rates.
- 2) Switching effects: It would be an outcome of developed economies scouting for new sources to fulfil import demands, which requires firms to be nimble and competitive.
- Trade policy has to recognise the pitfalls of the present two-track mode, one for firms operating in the ‘free trade enclaves’ and another for the rest.
- A major fallout of this ‘policy dualism’ is the dampening of export diversification.
- The challenge is to make exporting activity more attractive for all firms in the economy.
3) Increasing women’s participation in labour force
- While India’s GDP has grown by around 6% to 7% per year women’s labour force participation rate has fallen from 42.7% in 2004–05 to 23.3% in 2017–18.
- This means that three out of four Indian women are neither working nor seeking paid work.
- Globally, India ranks among the bottom ten countries in terms of women’s workforce participation.
- When Bangladesh’s GDP grew at an average rate of 5.5% during 1991 and 2017, women’s participation in the labour force increased from 24% to 36%.
- India could gain hugely if barriers to women’s participation in the workforce are removed.
- The manufacturing sector should create labour-intensive jobs that rural and semi-urban women are qualified for.
Consider the question “Relocation of supply chains offers an opportunity for India. However, it faces several challenges in attracting these relocating supply chains. What are these challenges? Suggest measures to deal with these challenges.”
Conclusion
India’s approach to the changed scenario needs to be well-calibrated. The stage is set for a new ‘Asian Drama’. What will be India’s role in it? Well, it will not be on the basis of past accolades, for sure.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Vulture Action Plan 2020-25
Mains level: Paper 3- Conservation efforts
Union Minister for Environment, Forests and Climate Change has launched a Vulture Action Plan 2020-25 for the conservation of vultures in the country.
Vulture Action Plan
- While the ministry has been carrying out a conservation project for vultures since 2006, the plan is to now extend the project to 2025 to not just halt the decline but to actively increase the vulture numbers in India.
- There are nine recorded species of vultures in India — the Oriental white-backed, long-billed, slender-billed, Himalayan, red-headed, Egyptian, bearded, cinereous and the Eurasian Griffon.
- Vulture numbers saw a steep slide — as much as 90 per cent in some species — in India since the 1990s in one of the most drastic declines in bird populations in the world.
Decline in Populations
- Between the 1990s and 2007, numbers of three presently critically-endangered species – the Oriental white-backed, long-billed and slender-billed vultures — crashed massively with 99 per cent of the species having been wiped out.
- The number of red-headed vultures, also critically-endangered now, declined by 91% while the Egyptian vultures by 80%.
- The Egyptian vulture is listed as ‘endangered’ while the Himalayan, bearded and cinereous vultures are ‘near threatened’.
Why protect vultures?
- Vultures are often overlooked and perceived as lowly scavengers, but they play a crucial role in the environments in which they live.
- The scavenging lifestyle that gives them a bad reputation is, in fact, that makes them so important for the environment, nature and society.
- Vultures, also known as nature’s cleanup crew, do the dirty work of cleaning up after death, helping to keep ecosystems healthy as they act as natural carcass recyclers.
Various threats
- The crash in vulture populations came into limelight in the mid-90s, and in 2004.
- The cause of the crash was established as diclofenac — a veterinary nonsteroidal anti-inflammatory drug (NSAID) used to treat pain and inflammatory diseases such as gout — in carcasses that vultures would feed off.
- Just 0.4-0.7 per cent of animal carcasses contaminated with diclofenac was sufficient to decimate 99 per cent of vulture populations.
Various initiatives
- The MoEFCC released the Action Plan for Vulture Conservation 2006 with the drugs controller banning the veterinary use of diclofenac in the same year and the decline of the vulture population being arrested by 2011.
- The Central Zoo Authority (CZA) and Bombay Natural History Society (BNHS) also established the Vulture Conservation Breeding Programme.
- It has been successful and had three critically-endangered species bred in captivity for the first time.
- The ministry has now also launched conservation plans for the red-headed and Egyptian vultures, with breeding programmes for both.
- The Vulture Safe Zone programme is being implemented at eight different places in the country where there were extant populations of vultures, including two in Uttar Pradesh.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 72 and Article 161
Mains level: Paper 2- Judicial scrutiny of decisions by functionaries
The inaction by the Governor of Tamil Nadu on advice to free the convict has raised the possibility of judicial intervention due to undue delay.
Inaction by Governor on advice
- The Governor of Tamil Nadu has continued to withhold his decision on an application seeking pardon by one of the seven prisoners convicted in the Rajiv Gandhi assassination case.
- In September 2018, the Supreme Court (SC) had observed, while hearing a connected writ petition, that the Governor should take a decision
- The inaction by the Governor now has given rise to constitutional fault lines within the Executive arm of the government.
Past judgements on pardoning power
- In Maru Ram v. Union of India (1981) Supreme Court held that the pardoning power “under Articles 72 and 161 of the Constitution can be exercised by the Central and the State Governments, not by the President or Governor on their own.”
- The majority judgment had said that the “advice of the appropriate Government binds the Head of the State”.
- Therefore, a Governor is neither expected, nor is empowered, to test the constitutionality of the order or resolution presented to her.
Issue of delay in decision of mercy petition
- Recently, the Supreme Court, had examined the inordinate delay by the President and the Governor — in taking decisions on mercy petitions.
- The Supreme Court, in the case of Shatrugan Chouhan v. Union of India, laid down the principle of “presumption of dehumanising effect of such delay”.
- The Supreme Court confirmed that the due process guaranteed under Article 21 was available to each and every prisoner “till his last breath”.
Judicial scrutiny of the actions of Speakers
- It was hitherto believed that the powers of the Speaker, holding a constitutional office and exercising powers granted under the Constitution, were beyond the scope of a ‘writ of mandamus’.
- In the recent case of Keisham Meghachandra Singh v. Hon’ble Speaker (2020), the Supreme Court was asked to examine the Speaker’s inaction with regard to disqualification proceedings.
- However, the apex court, referering to Rajendra Singh Rana v. Swami Prasad Maurya (2007), had confirmed its view that the “failure on the part of the Speaker to decide the application seeking a disqualification cannot be said to be merely in the realm of procedure”
- Consequently, breaking years of convention, the SC set the time period of four weeks to decide the disqualification petition.
- By doing so, the Supreme Court has indicated that it would not be precluded from issuing directions in aid of a constitutional authority “arriving at a prompt decision”.
Consider the question “The undue delays and inactions by the constitutional functionaries threaten to widen the constitutional faultlines among the Executives. Comment.”
Conclusion
Instead of relying on the judicial intervention in the event of delays, it would be better to have a set time limit for arriving at decision by the constitutional judiciary.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Nutrition safety
The article highlights the issue of nutrition and suggest the ways to achieve nutrition security in the country to drive sustainable growth for India.
Nutrition in India
- A recent United Nations report- The State of Food Security and Nutrition in the World, 2020 highlighted that there are 189.2 million undernourished people in India.
- Even though this number has declined by 60 million over the past decade, the progress is far too slow.
- While we recorded a drop in undernourishment, obesity amongst Indian adults grew from 25.2 million in 2012 to 34.3 million in 2016.
- India is likely to miss the 2025 global nutrition targets according to the Global Nutrition Report 2020, unless more is done, soon.
Impact of POSHAN Abhiyan
- With the launch of POSHAN Abhiyan in 2018, the government mainstreamed nutrition, with this multi-ministerial and multi-sectoral approach.
- It converges all existing programs to improve the nutritional status of pregnant women, mothers and children.
- It brings together several programs such as National Rural Health Mission, Mid-Day meals, Integrated Child Development Scheme, Sarva Shiksha Abhiyan, and others to improve nutrition intake in India.
- The success lies in following an outcome based approach to ensure all the benefits under these interventions are delivered to mothers and children within the first 1000 days, setting the base for healthier lives.
Micronutrients through food fortification
- Food fortification is another effective way to deliver micronutrients to Indian masses, through existing food delivery systems such as mid-day meals and the public distribution system.
- Regulators have already been promoting fortification in food products like salt, edible oil, milk, rice and wheat flour to improve nutritional content.
- Going forward, we will see more and more food products and crops getting covered.
Need for innovation
- It is crucial for the food and beverage industry to make nutrition an integral part of their strategy.
- Healthier ingredients, fortification, reformulation to reduce saturated and trans-fat content and optimize sugar and sodium content, immunity boosting product is already commonplace across urban markets.
- This will soon permeate to rural markets.
- Factors such as product taste, convenience, shelf life, and price – all of which determine consumption – are also important elements that ensure higher intake of nutritious products by consumers everywhere.
- This calls for more innovation. Innovation in product, pricing, technology, digitalization, and research and development by food companies.
Rising nutrition awareness
- Solving the problem of malnourishment has to start with awareness.
- In rural areas, general nutritional awareness has historically been lower.
- In urban areas even though people are generally more aware a large percentage still consumes excess sugar and salt, leads sedentary lifestyles coupled with lack of exercise, resulting in lifestyle diseases like diabetes, obesity, high blood pressure
- Consumers everywhere need to be better educated about nutritional benefits of common food items and the importance of including them in regular diet.
- This can be done effectively through government led awareness campaigns and healthy public food distribution initiatives, industry acting responsibly.
Conclusion
Good nutrition is the best investment we can make in human capital. It has the power to drive sustainable economic growth for India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: ASEAN and RCEP
Mains level: Paper 2-Implications of not signing RCEP for India
India’s challenges from RCEP didn’t end by staying out of it. Remaining out of the RCEP has several implications for India. This article discusses such challenges.
What RCEP mean for the region
- The RCEP was finally signed by its 15 members on the sidelines of the Asean Summit last week without India.
- This would make it a trade deal that includes the ten Asean economies, and all of Asean’s bilateral FTA partners, except India.
- It would create new market access for China and Japan-the two largest economies of the group.
- China, Japan and Korea were negotiating a trilateral trade pact, which now might become inconsequential following RCEP.
- In this respect, RCEP would actually produce much greater market access outside of the Asean, among non-Asean members China, Japan and Korea.
- Asean’s specific market access gains would be over and above those that are already available through various Asean+1 FTAs.
- Additional market access gains would be more with respect to China, in terms of the additional tariff coverage and concessions that RCEP would provide.
Implications for China
- Apart from the additional preferential access it obtains, it is also able to pull off strategic dividends.
- As the RCEP proceeds, it would establish China’s decisive say in writing the rules of trade in the region through the RCEP.
- And this is precisely what the US would be wary of.
Implications for the U.S.
- President Obama had pitched the Trans-Pacific Partnership (TPP) as an obvious and essential alternative for counterbalancing Chinese strategic domination of the regional trade game.
- The US was taken out of the TPP by President Trump.
- The remaining members managed to salvage the deal, largely due to the spirited leadership provided by Japan and Australia.
- While the TPP survives as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
- But CPTPP is incapable of being a strategic counterweight to China, and the RCEP.
- Nothing other than a CPTPP that includes the US would be able to counterbalance China in economic size and strategic clout.
Way forward
- The Quad—a security partnership between the US, Japan, India and Australia—is looking to expand beyond defence and assume broader strategic proportions.
- Geopolitics is contributing significantly to the construction of economic alliances, including the reorganisation of regional supply chains.
- Due to these factros, search for an Indo-Pacific trade and economic compact is likely to hasten following the conclusion of RCEP.
- Following RCEP, and the almost non-existent possibility of returning to its fold, India too, might find itself working actively on moving towards an Indo-Pacific trade deal.
- The RCEP, which has a sizeable number of key Indo-Pacific economies like Japan, Australia, Korea, Vietnam and Indonesia, would need to stick to these countries to stick to the trade agreement after its ratification.
Conclusion
RCEP might actually force the U.S to look at returning to CPTPP much more proactively than it might have imagined. It would also, expectedly, look at India to join the bloc. That would be another challenge to navigate. India’s challenges from the RCEP might have increased in spite of staying out of it.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Policy framework for adaptation of technology
The changing realm of technology requires a change in the policy framework. The article discusses the issue of the impact of technology and the required changes in the policy framework.
Adoption of information-based technologies
- The expansion of computing power has driven the pace of information gathering and analysis.
- The new currency drives processes and decision-making across a wide array of products and services, making them more efficient and value accretive for consumers.
- These information-based technologies have been widely adopted across a broad range of industries and products that traditionally have not been perceived as electronic or software based.
- A modern automobile has 40% of its component value from electronic-based products.
- This is a paradigm shift as the amount of “value add” from intangible technology services as opposed to physical objects, even in traditional goods, is being transformed by information.
- Information and electronics are becoming all-pervasive, ensuring that we set boundaries to control quality or the uptime of the equipment.
- Information availability drives efficiency and creates value for customers by providing greater control over the product
- There is increasing digitisation and electronification of industrial activities, products and services, influencing the evolving skill sets in industry.
Need for holistic views in policies
- To address the needs of various stakeholders, governments have tended to build specialised departments and designed policies that govern those areas.
- Over time, as each of these departments grew, they have tended to operate in silos.
- The recent developments in technology have, however, blurred standard boundaries that dictate policy framework in most governments.
- As technology is driving an increasing share of the value add coming from digitisation and data analytics, there needs to be a way of encouraging capital formation by way of intangibles in traditionally tangible industries.
- There is a need to have a holistic view of policies for economic development as technology is becoming a significant enabler in most industries.
- A change in policy framework regarding economic development that enables various ministries to work together is essential.
Way forward
- A nourishing ecosystem for industry, including the hard infrastructure and softer areas such as education, skilling, technical institutions, laboratories, testing centres, etc., has to be cultivated.
- The creation of clusters of companies in adjacent but complementary areas could constitute such an ecosystem that encourages multi and cross-disciplinary learning and spur innovation and economic development.
- Moreover, this type of ecosphere could also attract investment and capital formation.
- There is also the larger issue of a shift of value between manufacturing and services as technology changes.
- The policy, by and large, promotes and gives incentives for manufacturing, whereas the share of intangibles are not adequately covered in industrial policies.
- It is important to include these to encourage innovation and technological development.
- It is important that there is close cooperation and alignment between the Centre and State to ensure effective implementation on the ground.
Conclusion
Some of these thoughts could help us navigate through an ecosystem that is changing with technology.
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Note4Students
From UPSC perspective, the following things are important :
Mains level: Paper 2- India-China relations and increasing convergence
Track 1.5 dialogue
- The third round of India-Canada Track 1.5 Dialogue, comprising senior diplomats, officials and independent experts, will be held on a virtual platform.
- This promising interaction represents a major, deliberate endeavour to boost the bilateral relationship.
Convergence on China issue
- Common challenges of the COVID-19 era accelerated the momentum of bilateral engagement.
- Canada’s travails with China, starting with the arrest of Huawei’s chief financial officer in Canada in December 2018.
- Later, the ‘hostage diplomacy’ practised by Beijing which arrested two Canadian nationals, has caused huge stress in Canada-China relations, turning Canadian public opinion against China.
- This opened the door to a closer relationship with India.
- In this backdrop, developments concerning the Indo-Pacific — strengthening of the Quad and the growing interest of France, Netherlands and Germany to be active players in the region — are of immense relevance to Ottawa.
- The forthcoming dialogue can deepen the India-Canada convergence on this issue.
Principal area’s of bilateral cooperation
- Canada-India merchandise trade exceeded C$10 billion in 2019.
- Canada’s cumulative investment, including foreign direct investment and by Canadian pension funds, is a substantive C$55 billion.
- Addressing virtually the ‘Invest India’ conference in Canada on Prime Minister pointed out that mature Canadian investors have been present in India for many years and assured them that no barriers would come in their way.
- Indian students are increasingly being educated in Canada, and a quarter million of them spent an estimated $5 billion in tuition fees and other expenses last year, a solid contribution to the Canadian economy.
- Of 330,000 new immigrants accepted by Canada last year, 85,000 i.e. nearly 25%, were from India.
- The Indian diaspora in Canada is now 1.6 million-strong, representing over 4% of the country’s total population.
- The principal areas of bilateral cooperation are best defined by five Es: Economy, Energy, Education, Entertainment and Empowerment of women.
- In particular, the digital domain holds immense potential, given Canada’s proven assets in technology — especially its large investment in Artificial Intelligence, innovation and capital resources, and India’s IT achievements, expanding digital payment architecture and policy modernisation.
Conclusion
Divided by geographical distance but united through clear common interests and shared values, India and Canada will begin their steady journey of progress, this time with a laser-like focus on common goals as well.
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